The commodities market is a constantly evolving market covering a wide variety of tradable goods. There are three basic segments of the commodities market: agricultural, natural resources, and financial instruments. The agricultural segment is a broad segment covering everything from grains, such as corn and wheat, to oils and meal, such as soybeans and sunflower seed oil, to livestock such as live cattle and pork bellies. The agricultural segment also includes forest products, such as lumber and plywood, textiles such as cotton, and foodstuffs such as coffee and sugar. The natural resources segment covers metals and petroleum, such as gold, copper, crude oil, and natural gas. The financial instruments segment is another broad market covering everything from interest bearing assets, such as government treasury bills to municipal bonds, to foreign currencies, such as the yen and Euro, to futures on most major indexes, such as the S&P 500 and New York Stock Exchange Composite. For each of these commodities there are different contract months, grades, amounts, and types available for trading and the available commodities and contracts expands on nearly a daily basis.
Trading in such over-the-counter (“OTC”) commodities markets generally involves commodity traders and commodity brokers placing bids to buy physical commodities or derivatives, consisting of contracts known in the commodities industry as “swaps” and “options”, the value of which are based upon the fluctuating prices of one or more underlying commodities that are the subject of such contract, and offers to sell commodities and derivatives, in the various forms. Such bids and offers are often designated as firm or non-firm. Firm bids and offers are generally non-negotiable while non-firm bids may be negotiable. Trading of exchange traded futures and options are also extremely active in the commodities industry.
There has been an increasing desire in the various commodities markets to move toward Internet-based systems to cultivate the vast capabilities and possibilities of the Internet in order to attract new clientele and to expedite and process transactions between parties. Currently, OTC physicals and derivatives are traded dominantly via a phone based system of Party A calling Party B. Regulated futures contracts have been trading via a “pit” and electronic “non-internet” basis. However, the actual trading of the OTC physical and derivative commodities is generally left to brokers and traders using relatively traditional means of telephone, fax, and telex. In this regard, various industry entities comprised of commodity traders, commodity brokers, and combinations thereof, have been forming groups to study the use of the Internet as a tool to “pool order liquidity” and “streamline transactions and workflow”. However, when multiple groups form a major problem occurs as liquidity is thus divided up or spread out amongst the groups. Certain groups may have dominant liquidity in commodities specific to that group. However, commodities that are common to various groups have liquidity drained by splitting the liquid pool provided by users amongst the multiple groups.
When used herein, the term “exchange” refers broadly to various industry entities comprised of commodity traders, commodity brokers, and combinations thereof formed as groups to “pool order liquidity” and is not limited to official exchanges such as for example the New York Mercantile Exchange (NYMEX), World Financial Center, One North End Avenue, New York, N.Y. 10282, the Chicago Mercantile Exchange (CME), 20 South Wacker Drive, Chicago, Ill. 60606 or the Intercontinental Exchange, Inc. (ICE), Fifth Floor, 2100 River Edge Parkway, Atlanta, Ga. 30328.
What is desired, therefore, is a system for trading commodities and the like in an Internet-driven environment that enables various exchanges to create and share commodities within a unified database. What would be further desired is a system for trading commodities and the like in an Internet-driven environment that permits member traders and brokers of various groups to post and view bids and offers and negotiate and consummate transactions on commodities from one or more exchanges in an integrated presentation that pools order liquidity from the various exchanges.